Shares Gain On Earnings Beat, Analysts See Growth Ahead

Shares of Dr. Reddy’s Laboratories Ltd. rose on Monday after its second-quarter net profit beat estimates.

Most analysts maintained ‘buy’ ratings on the Hyderabad-based drugmaker on expectation of steady growth in India, expansion in China and improved performance in the pharma services and ingredients segment, including a pipeline of new products in the U.S.

The drugmaker’s net profit rose 12% over a year earlier to Rs 1,114 crore in the three months ended September, according to its exchange filing. That compares with the Rs 761-crore consensus estimate of analysts tracked by Bloomberg.

Dr. Reddy’s Q2 FY23 Highlights (YoY)

• Revenue rose 10% to Rs 6,332 crore (Estimate: Rs 5,805 crore)

• Ebitda was up 40% at Rs 1,901 crore (Estimate: Rs 1,239 crore)

• Margin was at 30% vs 23.5% (Estimate: 21.3%)

Shares of the drugmaker rose 3.47% to Rs 4,614.65 apiece during opening trade on Monday while the benchmark Nifty 50 gained 0.83%.

Of the 42 analysts tracking the drugmaker, 35 recommend a ‘buy’ and six suggest a ‘hold’ and one suggests ‘sell’, according to Bloomberg data. The average of the 12-month consensus price target implies an upside of 9.4%.

Here’s what brokerages made of Dr. Reddy’s Q2 results: